Source: Golden Ten Data
In the face of oversupply and low prices in the natural gas market, many top natural gas producers have announced that they will reduce production this year.
EQT Group (EQT), the largest producer of natural gas in the US, said on Monday that it will strategically cut production by March to cope with the lower US benchmark gas prices.
EQT will cut production by about 1 billion cubic feet per day from late February to March, and net production is expected to drop by about 30 billion to 40 billion cubic feet in the first quarter. One billion cubic feet of natural gas is enough to fuel approximately 5 million American households for a day.
The company said the production cut was “in response to the current low gas prices due to warm winter weather and the resulting increase in inventories,” adding that it will “re-evaluate market conditions” at the end of this month.
Affected by this news, US natural gas futures rose more than 7%, hitting 1.98 US dollars/million British thermal units.
Record gas production in 2023 and one of the warmest winters in decades brought US gas prices to their lowest level in decades. At the end of February, the price once fell to around $1.55 per million British pound, the lowest level since 1995 (excluding the sharp drop in energy prices due to the COVID-19 pandemic in 2020).
In the current situation of oversupply and low prices in the gas market, some top gas producers have announced that they will reduce production this year.
In its last quarterly earnings report, EQT reduced the 2024 production forecast range by about 50 billion cubic feet from the mid-January forecast to 220 to 230 billion cubic feet equivalent.
Due to the recent sharp drop in natural gas prices, Chesapeake Energy (CHK.O) has cut its 2024 fuel production plan by about 30%. Chesapeake Energy is the second-largest gas producer in the US and is expected to become the nation's largest gas producer soon after merging with Southwest Energy (SWN.N).
Other energy companies, including Antero Resources (AR.N) and Comstock Resources (CRK.N), are also planning to reduce drilling this year.
According to data from energy services company Baker Hughes (BKR.O), US gas drilling companies have reduced the number of gas rigs in operation by 26% in the past year, with most of the production cuts occurring in the Haynesville (Haynesville), Marcellus (Marcellus), and Utica (Utica) shale regions.
Oilfield service companies and drilling companies have also stopped hiring and are likely to lay off workers further. Some 4,680 oil fields have cut jobs since December last year.